Weighing up the cost of childcare vouchers

Fees levied by childcare voucher providers are usually expressed as a percentage of the value of vouchers ordered and this fee is subject to VAT. However, the funds an employer hands over to pay for vouchers are not.

Employers should consider that it is not just about the costs involved in childcare voucher schemes – a company should look at the service it gets for its money too.

There is no published comparison list for childcare voucher providers, so it is best to approach everyone on your shortlist for a quotation. Some have fixed rates but most will assess on a case-by-case basis.

Most providers will provide details of costs on request, but some will want to book an appointment with the employer before they are willing to discuss pricing. A handful of providers openly declare standard prices on their website.

Although the service charge will be part of the cost, there are other factors that will affect the value a company is getting from their scheme. A scheme can succeed or fail on the strength of its marketing within the organisation as well as impact savings for the company; therefore, the range of promotional materials offered by the voucher provider will have an effect, as higher uptake means greater savings in national insurance contributions for the company.

Bear in mind that the cheapest provider may not provide the quality service that employees expect or the robust systems that most companies would want. It is imperative to establish clear criteria on which to base an assessment, not just costs.